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Last-minute rush for telecom licence

New Delhi, Sept. 29: There is a mad scramble among companies to meet the October 1 deadline to submit applications for telecom licences.

The department of telecom will start working on a new policy and will not accept applications after October 1.

Companies from different sectors such as real estate, automobile, consumer durables and IT have geared up for the spectrum race. They are expected to dig deep into their pockets to battle it out with established operators.

“Cash-rich real estate companies, such as Unitech, DLF and Parsvnath, have ventured into telecom. They are attracted by the prospect of bagging nationwide spectrum at a throwaway price of Rs 1,700 crore,” said Alok Shende, senior telecom analyst at Ovum Datamonitor, Europe’s largest telecom research firm.

The pan-India licence will come with free allocation of 2G spectrum — 4.4 MHz for GSM players and 2.5 MHz for CDMA operators.

“A licence with free spectrum is worth several times the Rs 1,700-crore entry fee,” said Shende.

Infrastructure company Jaypee Group, Kishore Biyani-promoted Future Group, Sajjan Jindal-led JSW Steel and IT firm Tulip have also joined the rush for telecom licence. These firms may be new entrants but their experience in infrastructure will give them an edge over existing telecom players, Shende said.

Some experts feel the rush is because of the opportunity to make a quick buck by first getting the licence and then selling it to overseas players at a huge premium. Others, however, believe the newcomers may turn out to be serious contenders.

Analysts feel the spectrum crunch may not deter new players as these operators can opt for mobile technology used to offer services in closed areas or even explore Wi-Fi as an alternative to provide indoor coverage. “Existing players have avoided new and emerging technologies to provide mobile services as they have already made huge investments in traditional infrastructure,” said analysts.

The Cellular Operators’ Association of India, the representative body for GSM operators, has argued that some of the entrants may circumvent licence norms, including cross-holding restrictions.

This forced the department of telecom to weed out “non-serious players”. It said the applications would face a tough screening process. The department will issue more strict eligibility norms by the first week of October.

Companies, which do not have any experience, are teaming up with foreign telecom majors. Consumer durables major Videocon is reported to be in talks with the US-based Verizon, while the Hindujas are tying up with an European telecom firm. Mahindra & Mahindra is also weighing a partnership with AT&T.

The foreign entry into the sector would spark competition among players on price points and services offered, analysts said.

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